David Kamin
@davidckamin
Professor @nyulaw, former Biden and Obama administrations
Just to emphasize: On one of the largest and most progressive (in a wildly regressive bill) revenue raisers, the budget bills are leaving gaping holes on workarounds for certain biz owners and the Senate bill could well be giving away more $$$ than the House.
THREAD: GOP Senators say they're trying to scale back the SALT cap relief in the House bill. But could their approach to SALT end up *more* generous & costly overall than the House bill? Do Senators – or does anyone – even know, despite the intense political focus on SALT?
We are excited to launch a project to remake federal tax administration. Effective tax administration is critical to the federal government, but has faced drastic challenges over the last six months.
I’ll have more to say in the days to come, but David is right. I support making the income tax more economically neutral between savings and consumption, but that’s not what this does—unless you also adjust (reduce) interest and depreciation deductions by inflation.
Finally, unilateral executive indexing would mean parts of the system (basis) would be indexed when other parts (interest expense) wouldn't be. And that is a recipe for tax gaming (gains reduced by inflation, deductions include inflation).
If the Trump Admin goes through w/ trying to index capital gains for inflation by fiat...imagine what it would do to economy as it winds its way through courts & folks don't know how much they owe for selling an asset Easy to imagine folks holding onto assets until they find out
And since we wrote that paper, the fall of Chevron--no more deference to agency interpretation--and the rise of the major questions doctrine makes an already implausible legal argument even more so. Treasury can't radically change how "basis" works throughout the whole tax code.
THREAD Lawmakers are realizing “surprises,” “airdrops” &“mysteries” are buried in the bill. Time to take a beat: seems more important to know what's in a ~$5T bill than meet a fake deadline! Things worth $10s/100s of billions & people’s livelihoods & health aren’t “minutiae.”
The TCJA, whatever you think of it, was a genuinely reform-minded bill. It improved horizontal equity—the idea that tax rates should depend only how well-off you are, not how you make your money or what you spend it on. But this new bill would reverse much of that progress.
THREAD: This SALT “deal” in the latest Senate bill is a nonsensical approach to tax policy. It preserves (and lessens) a limit on deductions for wealthy taxpayers while ignoring a loophole that allows the wealthiest of those taxpayers to avoid the limit entirely.
SALT: New Senate bill lifts the state and local tax deduction cap to ~$40,000 for five years, then cuts it back down to $10,000.
Some of the surprise new tax breaks that popped up overnight in the new Senate text they're trying to shove towards a vote: 1) tax subsidies for spaceports (who asked for this?) 2) tax credits for coal (including exports)